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Why Hibbett Sports' Shares Dropped

Friday - 8/23/2013, 10:10am  ET

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Hibbett Sports fell as much as 12.5% today after the company reported earnings.

So what: Second-quarter revenue rose 13% to $186.2 million and net income was up 33% to $10.5 million, or $0.40 per share. Both figures were ahead of estimates, but the company lowered its fiscal 2014 earnings outlook from $2.85-$3.05 per share down to $2.65-$2.77 per share.  

Now what: A drop in expected same-store sales revenue increase was the reason for the reduced guidance. Consumers don't seem to be spending freely this back-to-school season, something many retailers are dealing with. With shares now trading at 20 times the low end of guidance, I think the stock is a little overvalued given the growth rate, so I'll sit out the discount today.

Interested in more info on Hibbett Sports? Add it to your watchlist by clicking here.

This article was originally published as Why Hibbett Sports' Shares Droppedon Fool.com

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